Vindication is always sweet, especially when it bolsters a flagging flagship cause. Just ask German Finance Minister Peer Steinbrück: Months after his quixotic quest for an international code of conduct for hedge funds seemed to have finally run aground, its fortunes have been revived by the U.S. subprime mortgage debacle and its effect on hedge funds.

And in a pair of speeches in Berlin and Frankfurt today, he took something of a pre-victory lap.

The German plan for greater hedge fund oversight, which has also been championed Steinbrück’s boss, German Chancellor Angela Merkel, “has been vindicated at a speed I couldn’t have imagined” when it was proposed, he said in the Berlin speech. Later in the day in Frankfurt, he told a banking conference that the push to improve “sound practices” is “going in the right direction.” He even expressed confidence that some sort of agreement might be reached at the next G7 meeting, set for October in Washington.

“In light of the current crisis, I could imagine that the hesitant behavior by the U.S. and Great Britain will change before our next meeting,” he said in Frankfurt. Up until now, Steinbrück, Merkel and their deputies had made a conscious effort to downplay expectations in advance of ministerial meetings.

Still, he sought to play down talk of an imminent meltdown, telling reporters after the Frankfurt speech, “We face a very serious, critical situation, but there’s also no need to dramatize it.” Earlier in the day in Berlin, he sounded another familiar note.

“I want to avoid and remove a misunderstanding that has always dominated this debate,” Steinbrück said. “This misunderstanding manifests itself in the word ‘regulation’; nobody in the federal government” expects “that these markets can be regulated.”

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